Natural Resources Forum 33 (2009) 245–249
Viewpoints
NRF, A United Nations Sustainable Development Journal is running a special series over the 2009–2011 period on themes
to be considered by the UN Commission on Sustainable Development in its 18th and 19th sessions: chemicals, mining,
sustainable consumption and production, transport, and waste management. In this issue, experts address the question:
“How can revenues from natural resources extraction be more efficiently utilized for local sustainable
development?”
Implied in the question is an ‘agency’ that is in charge of
receiving and, in turn, ‘utilizing’ the revenues for the local
communities. In this formulation, the communities
inhabiting the local geographical scale are seen as being
‘acted upon’ by this higher body; good is being done to
them. This innocuous question, therefore, consolidates the
undulating terrain of power before a dialogue can begin on
a level-playing field.
The question needs to be changed to: ‘how can local
communities utilise the natural resources to achieve
sustainable developmental outcomes?’ Such a formulation
would not embed rent-seeking by extractive companies —
multinational or nationally owned — and the State. The
local communities would not be stripped of ownership of
resources, which happened historically during colonization
often through enclosure.
If I had to give a prescription a la ‘What is to be done’,
I would advocate that mineral resources be co-managed
with only a small portion of the revenues given to the
national and other state agencies. In a number of other
natural resources sectors, the local communities’
ownership, interest and ability to manage have been
recognised. Evidence is mounting that co-management
yields more equitable and sustainable developmental
outcomes. Imagining an alternative (and better) future
would involve radically changing the current power
superstructures, and a first step is to accept the local
communities as rightful owners of resources and as
resourceful enough to manage the revenues for themselves.
Kuntala Lahiri-Dutt
Fellow, Resource Management in Asia Pacific Program
The Australian National University
Australia
Effectively utilizing resource revenues begins with
empowering communities to meaningfully participate in
© 2009 The Authors. Journal compilation © 2009 United Nations
decision-making. As the intended beneficiaries of revenue
redistribution and (too often) the victims of the negative
impacts of extraction, communities have a right to a voice in
determining when and where resource extraction will occur,
and how it will support existing livelihoods. Local laws and
corporate policies should be reformed to enable this.
Communities also have a right to information on resource
revenues, environmental impacts, and local budgets.
Community groups should receive the training and
technical support needed to act on this information.
Governments should allocate resource revenues for this
purpose.
Extraction creates few jobs and thus little direct local
economic benefit. Benefits must come via investing
revenues in, for example, agricultural production or value-
adding industries. Governments should explain how these
investments fit into national development strategies,
including infrastructure development and economic
diversification, so that they do not become isolated
enclaves. Recent experiences in Peru, Chad and Papua New
Guinea demonstrate that resource-based growth does not
magically “trickle down”. A mine or pipeline may bring
clinics or schools. But if the revenues they produce do not
increase productivity and employment, they do not
contribute to broad-based development.
Keith Slack
Extractive Industries Program Manager
Oxfam America
Washington, DC
A major impediment to increasing local sustainable
development benefits from the extraction of natural and
mineral resources is that agreements made between
companies and governments do not take into account the
needs of local populations and their use of the area. Post-
mining phase work and land-use should be planned at the
246 Viewpoints / Natural Resources Forum 33 (2009) 245–249
conception of the extraction activity. Planning across
landscapes to consider the various uses and needs met by
natural resources would help to account for an equitable
division of resources. In addition, training indigenous
government geologists to be better able to negotiate mining
leases could ensure that sustainable development is more
efficiently safeguarded. Providing relevant educational
opportunities in the earth sciences that are regionally sited,
use appropriate local data, and focus on solving regional
issues could help guarantee local benefits are obtained. The
private sector must engage with universities and geological
surveys in order to accomplish this mutually beneficial
transfer of skills, knowledge, and material wealth to provide
a well-trained local staff.
Secretariat of the IGCP Programme
UNESCO
Paris, France
Although the question about how to use revenue from
natural resource extraction is a valid one, a more pressing
question has often been if such extraction is actually desired
by or desirable for local communities. All too frequently,
concessions for natural resource extraction are made
without due deference to the rights and interests of
indigenous and other local people to their traditionally
occupied territory and to free, prior and informed consent.
These rights are widely recognized and were recently
reinforced by the Inter-American Court of Human Rights,
which noted that ‘members of tribal and indigenous
communities have the right to own the natural resources
they have traditionally used. Without them, the very
physical and cultural survival of such peoples is at stake’
and ‘when large-scale development or investment projects
could affect the integrity of [such] people’s lands and
natural resources, the State has a duty to obtain their free,
prior, and informed consent.’ It is vital to remember that a
key element of local sustainable development is ensuring
that the rights and interests of indigenous peoples and other
local communities are recognized and respected by states
and companies; this means that resource extraction may not
be the preferred route to local development in the first place.
Lauren Baker
Doctoral Student
Yale School of Forestry and Environmental Studies
New Haven, Connecticut
Local enterprise development needs to be an integral
part of societal capacity building for local sustainable
development. This enterprise development — the building of
capacity among local people to provide products and
services that support broader sustainable development
efforts — can substitute for seed finance and aid in
developing countries. The sustainable extraction of natural
resources — timber, ore, precious gemstones, other
minerals, water, fossil fuels — must be viewed as a multi-
stakeholder, multi-level capacity building venture. The
only way to answer the question in any given context is to
create a tailored participatory assessment, planning,
implementation and monitoring process that considers how
alternative extraction plans (including their supportive
capacity building) will yield local benefits, and how the
positive and negative impacts will be distributed among
stakeholders. So, in practice the answer is context-specific.
But in general, we can put in place the necessary multi-
stakeholder processes — the social enterprise architecture
if you will — that makes informed choices possible.
Development agencies, NGOs and governments (central and
local) should be supporting the creation of social networks
that bring diverse social actors together to understand
baseline conditions and needs, and compare natural resource
development alternatives in ways that reveal their anticipated
social, economic, cultural and ecological impacts.
Dr. Timothy J. Downs
Environmental Science & Policy Program,
Dept. of International Development,
Community & Environment,
George Perkins Marsh Research Institute
Worcester, Massachusetts
The best answer is very simple:
“Ensure that local communities are in a position to earn
revenues from natural resources extraction. This may
require that local communities be given ownership, or at
least participation, in natural resources extraction on land
they consider to be their own.”
Jeffrey A. McNeely
Chief Scientist
International Union for Conservation of Nature (IUCN)
Gland, Switzerland
Local sustainable development has two interrelated sides,
environmental and economic. Revenues from natural
resources (NRs) extraction can be efficiently utilized for
local sustainable development both directly and indirectly.
From the environmental perspective, a direct approach is a
government rule that requires all companies performing
NRs extraction activities to use part of their revenues for
financing “NRs friendly” activities, e.g. forest management
and maintenance, water treatment, development of better
technologies/ways of production to reduce CO2 emissions.
An indirect approach is for the companies to pay an extra
tax or retribution to be used by the local governments to
finance such ‘NRs friendly’ activities. From the economic
perspective, a direct approach is to require the companies to
© 2009 The Authors. Journal compilation © 2009 United Nations
 Viewpoints / Natural Resources Forum 33 (2009) 245–249
employ local people and use local inputs. It also includes
production linkages (e.g. subcontracting arrangements)
with local firms in other sectors e.g. transportation,
services, manufacturing. An indirect approach is through
local community development programs, e.g. infrastructure
development, building schools, funding study grants for
local youth, etc. Rather than local communities being
dependent on extractive companies, such programs should
promote communities that are independent economically
andtechnologically, so that when NRs extraction activities
are ended, the local economic development does not
collapse.
Prof. Tulus Tambunan
Center for Industry, SME & Business Competition Studies
University of Trisakti
Jakarta, Indonesia
In developing countries, natural resources are often
managed solely for revenue generation. Natural resource
revenues may contribute to the national exchequer but
diminish local development. To improve this situation,
different approaches such as development of markets,
payments for ecosystem services, and community based
adaptive management have been developed. These
approaches provide alternative frameworks to select
development paths, alas often ignoring the costs associated
with them.
These frameworks could be strengthened by using the
‘marginality’ concept, which reflects changes in value
(costs or benefits) due to change in one unit resource.
Firstly, not all sections of the community are equally
dependent on natural resources. Therefore they respond
differently to changes in natural resources. Secondly, not all
natural resources services are equally important to the local
community. In summary, different services of natural
resources have different levels of marginal benefits and
costs to different sections of the community, which, in turn,
are likely to have different kinds of needs and capabilities to
respond to changes.
Consequently, to ensure efficient long-term development,
the planning frameworks should take account of the
marginal costs and benefits for different sections of the
community over different timeframes, and use revenues
accordingly.
M. S. Iftekhar
School of Agricultural and Resource Economics
University of Western Australia
Crawley, Australia
One obvious, but in practice often overlooked, means is
through meaningful public participation. The aim might not
be to use revenues more efficiently but to invest them more
© 2009 The Authors. Journal compilation © 2009 United Nations
247
collaboratively and equitably. Not all social investments
lead to positive outcomes. Actions, even well-meaning
ones, which are not socially, culturally, or environmentally
grounded in the people and places (potentially) affected by
a development, invariably result in poor outcomes.
Investment of revenues derived from taxation or
royalties, and direct investment by resource developers
(e.g. community trusts, foundations and community
development programs), can both benefit from varying
degrees of (local) public involvement. Participation can
shape proposals, influence decision making, build trust,
legitimacy, and capacities. Participation can range from
community boards and reference panels, the submission of
ideas for, and implementation of, community projects,
devolved decision making, provision of consent, and
innovative exercises such as community visioning
processes to guide investments. In areas of intense resource
development cooperation can target cumulative impacts.
Understanding communities, their relationships,
networks, world views, how people construct what is a
resource, and the customs that guide how they relate to them
are important first steps. But, ultimately, the answer is that
government and resource developers (and especially
academics!) do not have all the answers. Through
participation they may open meaningful dialogue, address
real and perceived community concerns, and negotiate
mutually beneficial futures that are more sustainable and
locally relevant.
Dr. Daniel Franks
Centre for Social Responsibility in Mining
Sustainable Minerals Institute
The University of Queensland
Brisbane, Australia
In the Brazilian Amazon region reality, revenues from
natural resources extraction come from the income earned
by local communities through the sale of forest products,
mostly lumber, essences, fishery and hunting. To equate
these income flows to a sustainable development
framework, which by definition, meets the needs of the
present without compromising the ability of future
generations to meet their own needs, a balance must be
found between present and future consumption, involving a
trade-off between diminishing and increasing the existing
stock of natural resources.
This could be accomplished primarily through two main
vectors: market integration and education. Revenues
generated locally must be invested in expanding market
integration by, for example, creating an added-value system
for certified sustainable products. This would generate
economic incentives for locals to establish balanced
production processes of forest products.
On the other hand, education should instil the
significance of the rain forest as the locals’ main asset; an
248 Viewpoints / Natural Resources Forum 33 (2009) 245–249
asset that must be preserved for future generations as well
as for continuous income-generating activities. Both of
these courses of action should aid a better allocation of
locally-generated revenues, resulting in a healthier
equilibrium.
Prof. Waldemar Souza
Federal University of Amazonas — UFAM
Manaus Amazonas, Brazil
The challenge of making revenues from natural resources
extraction benefit sustainable local development is resolute;
requiring multi-pronged approaches to resolve. This
problem is more pronounced in developing countries where
economic development relies primarily on extractive
industries, such as mining, petroleum, fishing, trophy
hunting and timber exploitation. While attempts are being
made to optimize revenue retention for local sustainable
development, compliance by the multi-national, private and
state-owned extractive companies in disclosing payments
(royalties, fees, taxes, etc) made to the governments is still
unsatisfactory.
Greater transparency would promote accountability for
these revenues, reducing corruption and expropriation of
national resources by individuals. Success requires:
• The governments of nations with extractable resources
should implement policies, legislation and procedures
that enable transparency. The civil society should support
this legislation by advocating for and mobilizing public
support for transparency.
• Greater rural communities’ participation in decision-
making on resource revenue distribution. This would
require well capacitated and informed grassroots’
governance institutions that are able to demand and
advocate for broad-based economic and social
development of their constituencies.
• Donor organizations should financially support the
empowerment and capacity building of civil society
organizations across resource-rich countries so that they
can take the lead in mobilizing citizens to hold their
governments accountable for the management and
expenditure of revenues received from extractive
industries.
• Social and environmental certification of extractive
industries by independent agencies to ensure that both
renewable and non-renewable resources are exploited in a
manner that ensures social and environmental safeguards,
as well as contributing to socially responsible local
development.
Simon M. Munthali
African Wildlife Foundation
Johannesburg, South Africa
Many governments, national and international stakeholders,
scientists and several others interested in environmental
issues are realizing the important role local communities,
local landowners and local stakeholders play in natural
resource conservation. One way to engage those
stakeholders is to allocate a portion of the revenues
accruing from natural resource exploitation to local
developmental issues. However, the exact mechanisms that
allow the efficient utilization of such revenues at the local
level are not always well understood.
To ensure efficiency in revenue utilization at the local
level and the derivation of long-term benefits from the
investment it is important to devote time and effort to
understanding several crucial realities of local
environments and: 1) clearly identify the scope, breadth and
interest of local, national and international stakeholders that
affect local development issues; 2) have a good
understanding of local development needs and priorities
directly from local communities, local institutions and local
key individuals; 3) ensure there are appropriate structures
and mechanisms to monitor revenue utilization; 4) clearly
understand the factors, mechanisms and forces that connect
local economies to the greater national and international
economies; 5) integrate development efforts to existing
development structures and institutions; and most
important, 6) have a good understanding of the history,
culture, and social structure of local people and how they
relate to their environment.
Dr. Oscar Wambuguh
Assistant Professor
Environmental Health Sciences
California State University, East Bay
Hayward, California
The conventional practice where natural resource
monitoring responsibilities are shifted to the grassroots but
the net incomes accruing from the resources (e.g. timber,
gold, cacao, and oil) are controlled at the formal governance
sectors is inimical to maximising revenues. This alienates
ownership, and spawns violent civil conflicts, which
potentially curtail initiatives to sustain local development.
Thus, for revenue utilization to generate sustainable gains
that significantly surpass the marginal efficiency threshold
will require fresh policies and adaptable legal strategies that
encourage participatory conditionality and rigorous
financial accountability amongst local authorities,
legitimate civil societies and global governing institutions
not only during resource management but also at negotiated
points of sharing natural resource wealth.
Sylvanus S. P. Doe
Sustainable Development Researcher & Consultant
UCC — OCIC Partnership Programmes
Accra, Ghana
© 2009 The Authors. Journal compilation © 2009 United Nations
 Viewpoints / Natural Resources Forum 33 (2009) 245–249
Revenues from natural resources extraction are always the
focus of some serious and sometimes passionate debates in
the press, but seldom in the localities where they are
originated. This is even true for cases when, by law, such
revenues revert back to the local and regional communities.
Why is this so? Lack of consultation and public
participation is usually the answer to this question.
One of best Brazilian public consultation experiences
regarding natural resources management are those of
the River Basins Committees (Comites de Bacias
Hidrográficas), which have specific laws and regulations
that compel them to share public concerns with
stakeholders involved. However, water management is the
only natural resource that has such a transparent public
consultation policy in Brazil.
In the case of mineral resources, according to DNPM/
MME, the Federal Mining Agency in Brazil, in 2008 the
mining companies paid 225 million dollars in royalties
to Federal and State Governments, as well to the
Municipalities. However, since stakeholder consultations or
any other public discussions on how to use these funds are
unusual, the mining sites communities rarely know where
the money originates and how or where it is going to be
spent. Most mining communities are not organized nor do
© 2009 The Authors. Journal compilation © 2009 United Nations
249
they have civil organizations to support requests or needs.
Moreover, most of them are not yet aware of the sustainable
development (SD) concepts or goals that should drive their
present and future choices.
As a contribution, the authors have developed and
applied a guide to evaluate SD concerns and aspects
regarding small mining operations sites (small mining
clusters). See www.cetem.gov.br/publicacao/cetem_sed_
75.pdf. In addition, some mining companies are aware of
this challenge and are proposing their own guidelines in
regions where they conduct business.
See, for instance, ICMM at www.csrwire.com/
News/9025.html or Anglo’s SEAT protocol at www.
angloamerican.co.uk/aa/development/society/engagement/
seat/ and Newmont’s www.beyondthemine.com/2007/
?l=2&pid=240&parent=253&id=296. We suggest that the
“River Basins Committees” concept that works well in
many countries might be seen as a useful example and
could be applied to support natural resources public
management.
Carlos C. Peiter and Roberto C. Villas Boas
Researchers at the Centro de Tecnologia Mineral, CETEM
Rio de Janeiro, Brazil